talks tough on insurance,
‘meaningful rate reductions’
Article Courtesy of The Sun Sentinel
Published January 12, 2007
TALLAHASSEE -- Issuing his
prescription for Florida's insurance bills, Gov. Charlie Crist on Thursday
said the state must get more deeply involved in the property insurance
business to halt skyrocketing premiums.
Sounding optimistic, Crist praised legislators' plans for the special
session they will hold on the issue beginning Tuesday. But he cautioned
that whatever they pass must include substantial savings for homeowners
shell-shocked by rate increases.
can be assured that we will have meaningful rate reductions," Crist
said. "I'm not going to sign [any insurance legislation] unless it
has that. But that's going to be easy because the House and Senate are
already talking about ... rate decreases."
Crist proposed no specific legislation himself, instead outlining a set of
key objectives to resolve what has become Florida's hottest political
problem. Chief among the Republican governor's proposals: allowing
Citizens Property Insurance more flexibility to offer lower rates and more
coverage options so that it can go head to head with commercial insurance
"I want [Citizens] to be able to compete,"
Crist told reporters. "The more competition we have, the better off
it is for the consumer. They'll have more options, more power, more
choice. Their rates can be lower ... They'll no longer be the insurer of
The governor said he also approved of bills proposed in the House that
would alter Citizens' claims-handling procedures and oust its current
Current Citizens' customers could enjoy the most savings from the
proposals Crist endorsed, but none of the ideas the governor hailed
Thursday guarantees a rate cut for the four out of five homeowners
statewide -- including about half of those in South Florida -- who
purchase coverage from private companies.
House Republicans, however, predict their plan could lower the windstorm
portion of homeowners' premiums by 25 percent, perhaps as early as the end
of this year. Authors of the Senate proposal have predicted rate
reductions of 33 to 40 percent.
Crist said he will insist that homeowners obtain big savings on their
insurance bills. To achieve rate reductions, Crist and members of the
GOP-controlled Legislature acknowledge they must turn their back on the
conservative philosophy of less government intrusion in the private
For instance, Crist said he liked the proposal, authored by Senate
Democratic Leader Steve Geller of Hallandale Beach, that taxpayers pledge
to cover some of the insurance claims in the event of a major hurricane,
such as Andrew or Katrina, that can cause tens of billions of dollars in
But some legislators, as well as lobbyists for private insurance
companies, are opposed to making Citizens more like a private insurer,
meaning some of Crist's ideas may get a rough reception at the special
"I don't believe that a super government-run insurance company is
going to be satisfactory to the people," said state Sen. J.D.
Alexander, R-Winter Haven. "If that were true, then we'd all be
speaking Russian and not English."
Senate Republican Leader Dan Webster of Winter Garden said the ultimate
goal was to make Citizens such a financially sound enterprise that it
could be taken private.
"Our long-term goal is to turn Citizens into a marketable company so
we can sell it," Webster said.
On Wednesday, House and Senate leaders rolled out bills that would freeze
the rates charged customers of Citizens for a year, as well as offer
private companies easier access to state-subsidized reinsurance.
The House package of bills seeks to reduce homeowners' rates by demanding
that insurance companies that buy low-cost reinsurance from the state
hurricane catastrophe fund pass the savings along to their customers.
In contrast, the rate reductions envisioned in the Senate bill would come
about by having taxpayers shoulder the burden of compensating all
hurricane damages greater than $20 billion, giving insurers a break that,
theoretically, they could also share with consumers.
Webster said he and others are studying whether to alter their proposals
to include provisions requiring private insurers to cut rates. But even
without such assurances, Crist said lawmakers are on the right track.
"I could not be more pleased, nor could I shower more praise on the
Senate leadership and the House leadership," Crist said. "I
couldn't be more optimistic because of the dramatic steps that have been
taken this week."
Included in the House bill are two ideas that Crist pushed on the campaign
trail and which he repeated support Thursday. One requires companies to
sell homeowners insurance in Florida if they provide other coverage, such
as auto insurance. Crist has also pushed for the elimination of
Florida-only subsidiaries of insurance companies that allow those
companies to charge high rates in the state because of storm losses while
their national parent companies make large profits.